EY 30Transitional adjustments: life risk

1. This section applies to life insurance policies described in subsections (2) to (4). For the purposes of this section, a policy (the new policy) is treated as being issued at the same time as another policy (the old policy) that the new policy replaces, if the replacement is caused by—

2. reinstating the old policy after either a lapse in premium payments or cancellation by the insured, if the new policy comes into force within 90 days of the lapse or cancellation, and the life insurer treats the new policy and old policy the same; or
3. the life insurer being sold, or the life insurer selling or transferring its rights and obligations under the old policy.

4. If a life insurance policy is comprised of 2 or more life insurance product types that are capable of being sold separately, and the life insurance cover amounts for each product type are separately identified in the policy, then each of the product types may be treated as a separate life insurance policy for the purposes of this section.

5. This section applies to a life insurance policy, excluding an annuity, a multiple life policy through which the life insurer can look to the individual lives covered, credit card repayment insurance, and a workplace group policy, if the policy is issued by the life insurer before the grandparenting start day or if the life insurer receives an application and a deposit in money before the grandparenting start day for the policy which is issued after that day, and—

6. the life insurer has no policyholder base income or policyholder base allowable deduction for the policy; and
7. the policy meets the relevant requirements for the relevant period described in subsection (5)(a) to (c); and
8. the amount of life insurance cover at the finish of a cover review period, or at the finish of any shorter period, if the life insurer chooses to measure within the cover review period, has not increased by more than the greater of 10% and the percentage change in the Consumers Price Index (all groups) for the relevant period, as compared to the amount of life insurance cover at the beginning of the relevant cover review period; and
9. no new or replacement individual life is covered for a period beginning after the grandparenting start day.

10. This section applies to a multiple life policy through which the life insurer can look to either the individual lives covered or a relevant underlying life insurance policy, if the multiple life policy (the policy) is issued by the life insurer before the grandparenting start day or if the life insurer receives an application and a deposit in money before the grandparenting start day for the policy which is issued after that day, and—

11. the life insurer has no policyholder base income or policyholder base allowable deduction for the policy; and
12. the policy meets the requirements for the period described in subsection (5)(c), or, looking through to the individual lives covered or relevant underlying life insurance policy, to the extent to which the policy meets the requirements for the period described in subsection (5)(a), (b), or (c); and
13. to the extent to which, looking through to and in relation to the individual lives covered or relevant underlying policy,—
    1. the cover was first in place before the grandparenting start day:
    2. the multiple life policy is a life reinsurance policy that was first in place before the grandparenting start day; and
14. the substantial and material terms and conditions of the policy do not change on or after the grandparenting start day; and
15. either—
    1. to the extent to which, looking through to the individual lives covered, the amount of life insurance cover at the finish of a cover review period, or at the finish of any shorter period if the life insurer chooses to measure within the cover review period, has not increased by more than the greater of 10% and the percentage change in the Consumers Price Index (all groups) for the relevant period, as compared to the amount of life insurance cover at the beginning of the relevant cover review period; or
    2. in the case of a policy that is life reinsurance, to the extent to which a relevant underlying life insurance policy is, or would be ignoring section EY 10(2), one that this subsection or subsection (2) applies to.

16. This section applies to a credit card repayment insurance and to a workplace group policy, if the policy is issued by the life insurer before the grandparenting start day or if the life insurer receives an application and a deposit in money before the grandparenting start day, and—

17. the life insurer has no policyholder base income or policyholder base allowable deduction for the policy; and
18. the policy, if it is a credit card repayment insurance, meets the requirements for the period described in subsection (5)(c), or, if it is a workplace group policy, meets the requirements for the period described in subsection (5)(d); and
20. the substantial and material terms and conditions of the policy do not change on or after the grandparenting start day.

21. The following are the requirements and periods for the purposes of subsections (2)(b), (3)(b), and (4)(b), for a policy:

22. for a life insurance policy for which only 1 premium is ever payable, or for which the amount of each premium is the same, the period that—
    1. starts on the grandparenting start day; and
    2. finishes on the day that the policy ceases to be in force:
23. for a life insurance policy for which the premium is set for a continuous period (the continuous rate period) beginning before the grandparenting start day, and for which there is no increase in the premium during the continuous rate period other than an increase meeting the requirements of subsection (5BA), the period that—
    1. starts on the grandparenting start day; and
    2. ends on the later of the day that is the last day of the continuous rate period and whichever day described in paragraph (c)(i) and (ii) is earlier:
24. for a life insurance policy for which the premium may vary each year, the period that starts on the grandparenting start day and ends on the earlier of the following:
    1. the day that the policy expires:
    2. the day that is before the 5 years anniversary of the grandparenting start day:
25. for a life insurance policy for which the premium may vary each year, the period that starts on the grandparenting start day and ends on the earlier of the following:
    1. the day that the policy expires:
    2. the day that is before the 3 years anniversary of the grandparenting start day.

26. The requirements referred to in subsection (5)(b) for an increase in the premium under a life insurance policy in a year in the continuous rate period are that—

27. the increase is made under an agreement entered into before the grandparenting start day; and
28. the increase arises from a policy benefit that produces an increase, under a formula in the agreement, in the sum assured under the policy; and
29. the increase in the sum assured under the policy during the year does not exceed the greater of 3% and the percentage change in the Consumers Price Index (all groups) during the period that is the basis for the calculation, under the formula referred to in paragraph (b), of the increase in the sum assured.

30. This section does not apply for a policy for the whole of an income year if a cover review period finishes in the year and, for that cover review period, there has been an increase in the amount of life insurance cover as described in subsection (2)(c) or (3)(e) and the life insurer has not made an election for measuring within the cover review period under those subsections.

31. This section does not apply for a policy for any period after this section has ceased to apply for the policy.

32. This section does not apply to a class of policies after the life insurer irrevocably chooses in a notice received by the Commissioner that this section does not apply for the class.

33. A life insurer has an amount of shareholder base allowable deduction for a policy calculated using the following formula, to the extent to which this section applies for the relevant income year for the policy—

    $premiums\; -\; total\; net\; reserving\; amounts\; -\; (1.2\; \times \; expected\; death\; strain).$

    Where:

34. In the formula,—

35. premiums is the life insurer’s total premiums for the income year or part of the income year, as applicable, for the policy, but subtracting relevant life reinsurance premiums:
36. total net reserving amounts is the total of reserving amounts for the income year or part of the income year, as applicable, for the policy, under section EY 25 or EY 26 (as applicable), but treating amounts that are shareholder base income as negative amounts, and amounts that are shareholder base allowable deductions as positive amounts:
37. expected death strain is the amount calculated under the expected death strain formula (life) in accordance with sections EZ 53 to EZ 60 (which relate to the transitional adjustment for expected death strain) for the income year or part of the income year, as applicable, for the policy.

38. If subsection (7) gives a negative amount for a policy, it is ignored for that policy.

39. Cover review period means—

40. the relevant income year, if the life insurer has not chosen a different period under paragraph (b):
41. a period of a year that has a starting and anniversary date that the life insurer irrevocably chooses, for a class of policies, in a return of income for the tax year corresponding to the income year in which the grandparenting start day is included.

42. Credit card repayment insurance means a life insurance policy, if the benefits of the cover are for the repayment of an outstanding debt balance of a credit card, or life reinsurance to the extent to which it reinsures such a life insurance policy.

43. Repealed

44. Grandparenting start day means—

45. 1 July 2010, if paragraph (b) does not apply:
46. a life insurer's early life regime application day, if the life insurer irrevocably chooses that day as their grandparenting start day.

47. Multiple life policy—

48. means a life insurance policy with multiple individuals' life insurance cover grouped under it, if the group of individuals is identified in the policy:
49. does not include—
    1. a workplace group policy:
    2. credit card repayment insurance:
    3. life reinsurance to the extent to which it reinsures a workplace group policy or credit card repayment insurance.

50. Workplace group policy means a life insurance policy with multiple individuals' life insurance cover grouped under it, or life reinsurance to the extent to which it reinsures such a life insurance policy, if—

51. the individuals under the policy are—
    1. a group that includes, or consists of, a class of employees of an employer or group of employers, and may include 1 or more of the employers or directors of the employers, and the policy is sponsored by the employers or by the trustees of a superannuation scheme:
    2. members of a union registered under the Employment Relations Act 2000 or members of an industry association, and the union or association is the sponsor of the policy:
    3. the spouses, civil union partners, and de facto partners of employees or members described in subparagraphs (i) and (ii); and
52. in the case of the sponsor being the employer,—
    1. the employer is required to offer an employee who is a member of the relevant class the opportunity to join the life insurance policy; and
    2. the life insurer and the employer have entered an agreement about who pays the premium.

53. In this section, Consumers Price Index (all groups) means the Consumers Price Index (all groups) published by Statistics New Zealand or, if that index ceases to be published, any measure certified by the Government Statistician as being equivalent to that index.

Notes

• Section EY 30: substituted, on 1 July 2010, by section 190(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
• Section EY 30(1)(a): replaced (with effect on 1 July 2010), on 2 November 2012, by section 55(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
• Section EY 30(1)(a): replaced (with effect on 1 July 2010), on 2 November 2012, by section 55(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
• Section EY 30(1)(b): amended (with effect on 1 July 2010), on 2 November 2012, by section 55(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
• Section EY 30(1B) heading: inserted (with effect on 1 July 2010), on 7 September 2010, by section 50(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(1B): inserted (with effect on 1 July 2010), on 7 September 2010, by section 50(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(2): amended (with effect on 1 July 2010), on 7 September 2010, by section 50(2) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(2): amended, on 1 July 2010, by section 38(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
• Section EY 30(2)(c): substituted (with effect on 1 July 2010), on 7 September 2010, by section 50(3) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(2)(c): amended, on 1 September 2022, by section 107(1) of the Data and Statistics Act 2022 (2022 No 39).
• Section EY 30(2)(d): added (with effect on 1 July 2010), on 7 September 2010, by section 50(3) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(3) heading: substituted (with effect on 1 July 2010), on 7 September 2010, by section 50(4)(a) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(3): amended (with effect on 1 July 2010), on 2 November 2012, by section 55(3)(a) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
• Section EY 30(3): amended (with effect on 1 July 2010), on 7 September 2010, by section 50(4)(b) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(3)(b): amended (with effect on 1 July 2010), on 2 November 2012, by section 55(3)(b) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
• Section EY 30(3)(b): amended (with effect on 1 July 2010), on 21 December 2010, by section 59(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
• Section EY 30(3)(b): amended (with effect on 1 July 2010), on 7 September 2010, by section 50(4)(c) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(3)(b): amended, on 1 July 2010, by section 38(2) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
• Section EY 30(3)(c): replaced (with effect on 1 July 2010), on 2 November 2012, by section 55(4) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
• Section EY 30(3)(e): substituted (with effect on 1 July 2010), on 21 December 2010, by section 59(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
• Section EY 30(3)(e)(i): amended, on 1 September 2022, by section 107(1) of the Data and Statistics Act 2022 (2022 No 39).
• Section EY 30(4) heading: amended, on 1 July 2010, by section 38(3) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
• Section EY 30(4): amended (with effect on 1 July 2010), on 7 September 2010, by section 50(6) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(4): amended, on 1 July 2010, by section 38(4) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
• Section EY 30(4)(b): substituted, on 1 July 2010, by section 38(5) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
• Section EY 30(4)(c): repealed, on 1 July 2010, by section 38(5) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
• Section EY 30(5): amended, on 1 July 2010, by section 38(6) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
• Section EY 30(5)(b): replaced (with effect on 1 July 2010), on 26 June 2019, by section 65(1) (and see section 65(4) for application) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
• Section EY 30(5)(c)(ii): amended, on 1 July 2010, by section 38(7) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
• Section EY 30(5)(d): added, on 1 July 2010, by section 38(7) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
• Section EY 30(5BA) heading: inserted (with effect on 1 July 2010), on 26 June 2019, by section 65(2) (and see section 65(4) for application) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
• Section EY 30(5BA): inserted (with effect on 1 July 2010), on 26 June 2019, by section 65(2) (and see section 65(4) for application) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
• Section EY 30(5BA)(c): amended, on 1 September 2022, by section 107(1) of the Data and Statistics Act 2022 (2022 No 39).
• Section EY 30(5BA)(c): amended (with effect on 1 July 2010), on 23 March 2020, by section 114(1) (and see section 114(3) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
• Section EY 30(5B) heading: inserted (with effect on 1 July 2010), on 7 September 2010, by section 50(8) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(5B): inserted (with effect on 1 July 2010), on 7 September 2010, by section 50(8) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(5C) heading: inserted (with effect on 1 July 2010), on 7 September 2010, by section 50(8) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(5C): inserted (with effect on 1 July 2010), on 7 September 2010, by section 50(8) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(7): amended (with effect on 1 July 2010), on 7 September 2010, by section 50(9) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(8)(a): amended (with effect on 1 July 2010), on 7 September 2010, by section 50(10) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(8)(b): amended (with effect on 1 July 2010), on 21 December 2010, by section 59(3) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
• Section EY 30(8)(b): amended (with effect on 1 July 2010), on 7 September 2010, by section 50(11) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(8)(c): amended (with effect on 1 July 2010), on 7 September 2010, by section 50(12) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(11) heading: substituted, on 1 July 2010, by section 38(8) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
• Section EY 30(11): substituted, on 1 July 2010, by section 38(8) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
• Section EY 30(11): amended (with effect on 1 July 2010), on 7 September 2010, by section 50(13) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(12) heading: repealed, on 1 July 2010, by section 38(9) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
• Section EY 30(12): repealed, on 1 July 2010, by section 38(9) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
• Section EY 30(14) heading: substituted (with effect on 1 July 2010), on 7 September 2010, by section 50(14) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(14): substituted (with effect on 1 July 2010), on 7 September 2010, by section 50(14) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(14): amended, on 1 July 2010, by section 38(10) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
• Section EY 30(15) heading: added, on 1 July 2010, by section 38(11) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
• Section EY 30(15): substituted (with effect on 1 July 2010), on 7 September 2010, by section 50(15) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30(16): inserted, on 1 September 2022, by section 107(1) of the Data and Statistics Act 2022 (2022 No 39).
• Section EY 30 list of defined terms apply: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
• Section EY 30 list of defined terms employer sponsored group policy: repealed, on 1 July 2010, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
• Section EY 30 list of defined terms life insurance policy: inserted (with effect on 1 July 2010), on 26 June 2019, by section 65(3) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
• Section EY 30 list of defined terms notice: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
• Section EY 30 list of defined terms pay: inserted (with effect on 1 July 2010), on 7 September 2010, by section 50(16) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
• Section EY 30 list of defined terms premium: inserted (with effect on 1 July 2010), on 26 June 2019, by section 65(3) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
• Section EY 30 list of defined terms quarter: repealed (with effect on 1 July 2010), on 23 March 2020, by section 114(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
• Section EY 30 list of defined terms workplace group policy: added, on 1 July 2010, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
• Section EY 30 list of defined terms year: inserted (with effect on 1 July 2010), on 26 June 2019, by section 65(3) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).